IT spending forecasted to drop

Sep. 24, 2013 - 06:00AM
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Ongoing budget cuts, the move to cloud services, mobile products and better purchasing methods by agencies will drive down spending on IT products and services over the next five years, according to research firm Deltek in a webcast Tuesday.

Spending on hardware such as desktops, laptops, printers and monitors will fall from $23.3 billion in fiscal 2013 to $18.1 billion in 2018, while spending on software will drop from $12.6 billion to $11.4 billion, according to Deltek.

Spending on IT professional services, such as management and development, will also fall from $33.1 billion in fiscal 2013 to $28.6 billion in fiscal 2018.

Angie Petty, senior principal research analyst at Deltek, said in the webcast that although agencies know IT investments can help cut costs, they are finding it difficult to fund new investments.

“Agencies are trying to do more with less,” Petty said.

Instead, agencies are moving to service models where they do not need to provide or maintain the hardware or software needed to perform their missions and instead rely on contractors to provide the infrastructure and expertise.

As a result, IT outsourcing is the only segment projected to grow — from $26 billion in fiscal 2013 to $26.4 billion in 2018, according to Deltek.

“We are seeing a major shift from spending on desktops and laptops to mobile equipment, such as smartphones and tablets, which carry a lower price point,” Petty said.

She said agencies are also better at leveraging their bulk purchasing efforts, known as strategic sourcing, to get better prices on IT products and lower their overall spending.

The Veterans Affairs Department is one agency that will see spending on commodity software rise from $380 million to $660 million by fiscal 2018.